The pathway of cellular differentiation in the tracheobronchial epithelium is not well understood. Studies were undertaken to elucidate the differentiation potential of different airway epithelial cells. We established a series of markers including cell type specific monoclonal antibodies, antikeratin monoclonal antibodies and lectin binding to phenotype isolated rat tracheal epithelial cells. We isolated basal cells and secretory cells using flow cytometry combined with lectin binding and examined their proliferative and differentiation capacity in an in vivo culture model suited to study regeneration of tracheal epithelium. We found that basal cells as well as secretory cells are capable of many rounds of cell replication. Both cell types are capable of reconstituting a complete mucociliary epithelium, i.e., secretory cells can give rise to basal cells and basal cells can give rise to secretory cells. Both can generate ciliated progeny. Importantly, both basal cells and secretory cells transdifferentiate to a primitive, poorly differentiated (PD cell) phenotype as they initiate proliferentiation and generate differentiated offspring. While basal cells and secretory cells follow a similar pathway of dedifferentiation, proliferation and redifferentiation, they have very distinct growth factor and attachment substratum requirements. An air-liquid interface in vitro cell culture system was developed and characterized, which supports complete mucociliary epithelial differentiation of rat tracheal cells and establishment of a polarized epithelium. This culture system is now being used to study regulation of growth factor expression during various stages of mucociliary differentiation and to explore the role of various epithelial extracellular matrix molecules in regeneration and differentiation of airway epithelium. In collaboration with colleagues at the University of North Carolina at Chapel Hill, studies are being conducted to determine which airway cell types express the cystic fibrosis transmembrane chloride channel regulator. Using different airway cell fractions highly enriched in specific cell types, experiments conducted to date suggest that in rat tracheal epithelium the chloride channel regulator protein is mostly expressed in ciliated cells. Experiments are under way to confirm these findings, which are important for the design of gene therapy in cystic fibrosis patients.